Reinsurance News

Cincinnati Financial announces $120m Q3 cat losses

16th October 2018 - Author: Staff Writer

Cincinnati Financial Corporation has today announced that its property and casualty business expects its Q3 results to include pre-tax catastrophe losses of approximately $120 million, representing an impact on the Q3 2018 combined ratio of approximately 9.5% to 10%, based on estimated P&C earned premiums.

cincinnati-insurance-logoThe company’s 10‑year historical average contribution of catastrophe losses to the CR is 5.6% for Q3.

Losses from natural cat events affect P&C insurance underwriting income, one of the sources of consolidated net income along with profits from investment operations and life insurance operations.

This estimate for cat losses includes approximately $92 million for hurricane Florence, including approximately $7 million for its reinsurance assumed operations Cincinnati Re.

The estimate for total Q3 2018 cat losses incurred is approximately $77 million for the company’s commercial lines insurance segment, as well as $34 million for its personal lines segment and $9 million for Cincinnati Re.

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The company estimates that its Q3 2018 P&C CR will be in the range of 96% to 98%, including the effect of cat losses.

The ratio also reflects net favourable reserve development on prior accident years for the company’s commercial casualty line of business.

“Hurricanes Florence and Michael left a wide path of destruction across the southeast, changing lives forever,” said Steven J. Johnston, President and Chief Executive Officer.

“However, it’s in these tough times when our field claims representatives shine, helping our agents and policyholders quickly and in-person so that these families and communities can begin to rebuild.”

“We take the responsibility of paying our claims seriously and manage our capital to ensure we have ample capacity to pay insured losses promptly.”

The company expects hurricane Michael, which made landfall in Florida as a high-end category 4 storm last Wednesday, to impact Q4 2018 results, but that it currently cannot predict the magnitude, as many damaged areas are not yet accessible.

Based on initial claims reports received, most were covered by the company’s standard market lines business are for personal lines accounts with nearly half located in Georgia and approximately one-quarter in Alabama.

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